Transferring Your Home Loan

Home Loans are a long-term financial commitment with tenures typically ranging between 10 to 30 years. During this time there is a possibility that you may not be happy with your bank or lending institution, or that your existing interest rate may be too high compared to market rates.

There certainly will arise a thought under such circumstances to transfer your home loan  from your current lender to another. However, as a borrower, you need to look at other aspects as well before moving your loan.

Document Vetting for Refinancing – Even though it’s a transfer of a loan, it is still a new loan for the lender, for which they would require all documents that you originally gave your current lender for vetting process. Your financial statements may have also changed since you availed the loan, so that will also have to be made available through pay slips, Form 16, income tax returns and more.

Processing Fees – Since this will be like refinancing your loan, there is bound to be a processing chargeinvolved. Most banks and NBFCs charge anywhere between 1 per cent and 3 per cent of the remaining loan amount to be paid back as the charge.

Waiting Period – Your loan agreement with your current lender will determine when you are allowed to transfer your loan. You will have to wait until you pay the stipulated amount or complete the waiting period as stated in your agreement before you can find a new lender.

New Tenure and Interest Rate – The point of transferring your home loan is to get a better deal, unless you have severe service issues with your lender. You should try and reduce your tenure in such a scenario to pay off the loan earlier and also look out for lenders who offer a better rate.

Clear Any Pending Dues – The bank will need to give a clearance certificate that will allow the new lender to take charge of the loan. For this clearance you need to make sure that all your pending dues are clear. For instance, pending EMIs and late payment charges need to be paid off before you can transfer your loan.

Also if your home loan is on a fixed interest rate, you will have to pay a pre-payment penalty to transfer your loan. You may want to rethink about transferring your home loan in such a scenario as the penalty may eat up on the advantage given by the new lender.

Collateral Revision – Home Loans are automatically collateral loans as the said property papers will lie with the bank until the entire loan is cleared. If you have already repaid a huge chunk of your loan, do not offer the complete original collateral to your new bank. It is like giving a security which is double the amount of your loan outstanding in some cases. You can use it to take a separate loan instead, if the need arises. Instead, offer your new bank a lesser amount of collateral. If the bank still insists, negotiate for reducing the interest rate further.

Credit Card Charges

Joining or Annual Fee

While many credit cards come free of cost, i.e. no joining fees and perhaps exemption from annual fee for a particular period, the ones with bigger rewards and benefits generally tend to have a joining fee. Some may waive off the joining fee for the first year but may have it from the second year. Sometimes these charges are waived off if one spends up to a threshold specified by the bank.

Interest and Finance Charges

Most credit cards offer a 42 to 50 day interest-free period to pay for all spends. Some premium cards have finance charges regardless of where and when the card is swiped. But once the interest-free period passes, banks will levy an interest/finance charge to be borne by the customer if the full payment is not made on time.

Cash Withdrawal Charges

Credit cards also allow you to withdraw cash from ATMs. This option should be exercised only in emergencies. While there’s an interest-free period for all other credit card transactions, the interest rate applies immediately for cash withdrawals. If you withdraw cash in an emergency, repay it as soon as possible to avoid the hefty interest rate. (Minimum 300/- per withdrawal)

Over Limit Charge

There is a charge if you breach your credit limit and cash withdrawal limit. For instance, if your credit limit is Rs. 1 lakh but you have spent Rs. 1.25 lakhs on the card, be prepared to pay a charge. Normally a percentage of the excess spend is charged as penalty. So make sure to keep track of your spending and if you think you need to make a big purchase deposit the deficit amount by cash to the card if necessary.

Late Payment Charges

A late payment on your credit card bill can be disastrous in many ways. Firstly, your credit score gets affected, and secondly, you have to pay a late fee each time you are late in paying dues. While some banks charge a standard late fee, some charge a percentage of the amount due as late fee. Some may even charge an additional fee if your ECS for the credit card payment gets rejected.

In case you don’t have the full amount to repay your card, make sure to at least pay the minimum amount due, in order to avoid the late payment penalty.

Foreign Transaction Fee

Whenever a credit card is used for foreign transactions, whether online or at a point of sale, the bank levies a foreign mark-up fee. It ranges anywhere between 1.5 per cent and 5 per cent depending on the bank and the card. Cash withdrawals abroad are charged at a higher rate that card swipes. So when abroad you can carry enough cash or get a travel card to avoid these charges.

Balance Transfer Fee

A balance transfer is when you pay off the balances on existing credit cards or loans by transferring them to another credit card account. While many high value cards allow this free of cost, in some cases you may be charged a fee to complete the balance transfer – typically a percentage of the transfer balance. It is basically an expensive way to move money from one account to another, rather moving debt from one account to another, and you must avoid getting to this point by repaying your debts in a timely manner.

Under-reporting or misreporting your income to ITD?

As a taxpayer, it is very important for you to know that while filing the (ITR) income tax return, if a person under-reports his income or inflates his deduction/exemption, then the Income Tax Department (ITD) can impose a penalty on him under Section 270A of the Income Tax Act, 1961. You must be wondering that the Section 270A of the I-T Act is not a new section as it was introduced two years back in the Budget 2016. Then why is it being discussed now? Well, this section has become more important from this year because of the two recent moves of the I-T Department.

Firstly, the department has recently issued a cautionary advisory to all the salaried taxpayers who will be filing the IT returns for FY:17-18 to report their income correctly. This move has apparently been taken in order to stop all the malpractices which are being resorted to by the salaried taxpayers in order to evade tax.

Secondly, the department has also come up with the changes in the ITR Form 1 (Sahaj) for FY:17-18 which now seeks specific and complete details of your salary and house property income. Earlier, such details were not required; only the total figure was to be disclosed.

Now, let’s understand that what exactly is under-reporting or misreporting of income and how much penalty would be levied in such cases.

“As per Section 270A, if any person under-reports or misreports his income, then an assessing officer (AO), a commissioner (appeals), a principal commissioner or a commissioner may direct him to pay penalty in addition to the tax, if any, on such income. This penalty is to be paid over and above the taxes,”

Under reporting of income can be based on various circumstances. Like, if the income of a person exceeds the basic exemption limit, but still he does not file a return, then it will be considered as a case of under-reporting. However, “the cases of misreporting of income as defined in the Income Tax Act are misrepresentation or suppression of information; failure to record investments in the books; claim of expenditure without any evidence; recording of false entry in the books, failure to record receipt in books which is having effect on total income; and failure to report any international transaction or deemed to be an international transaction,” says Soni.

What is the penalty?

If the under-reporting of income is on account of misreporting of income, then the penalty shall be leviable at the rate of 200% of the tax payable on such under-reported income. However, if it is due to any other circumstances, then the penalty shall be 50% of tax payable on under-reported income.

Illustration, “if my income is, say, Rs 15,00,000/- i.e. I am in the 30% tax bracket, and have under-reported an income of Rs 2,00,000/- in ITR, then the AO can impose a penalty of up to about Rs 30,000/- (50% of the tax on under-reported income, i.e., Rs 60,000/- (2,00,000*30%)). However, if the under-reporting is due to misreporting of income, then penalty can be up to 200% of the tax on unreported income, i.e. 200% of Rs 60,000/-, amounting to Rs 1,20,000/-,”

However, an assessee may apply to the AO with explanation that why under-reporting or misreporting occurred. If satisfied, then the AO may not penalise the assessee or may reduce the quantum of penalty.

Therefore, from this year onwards you must be extra careful while filing your income tax return (ITR) for FY: 17-18, and disclose all your incomes under the respective heads. Otherwise, you may have to pay penalty u/s 270A for under-reporting or misreporting of your income along with the applicable taxes. So, be vigilant and file your IT return correctly.

Why paying more for bank services!

These steps you can take to avoid paying more to your bank.

Use the ATM wisely
Why: Several banks allow only five free transactions, even at their own ATMs. If you can’t do without cash, withdraw larger amounts at a time to avoid paying more.
You save: Rs 10-20 per withdrawal, Rs 5-8.50 for non-financial transactions.

Junk the cheques, switch to Netbanking
Why: Every additional chequebook attracts charges. Transfer funds through Netbanking for free.
You save: Rs 20-150 per chequebook, depending on number of leaves.

Clear credit card bills on time
Why: The outstanding amount will continue to attract hefty interest rates.
You save: 39-42% per annum in interest. Delay of three days could attract charges of up to Rs 750.

Take the auto-debit route for card bills
Why: Set up an auto-debit mandate instructing your bank to deduct a minimum 5% of credit card bill on due date to avoid steep penalty.
You save: 39-42% per annum that would have been levied on the unpaid amount.

Sign up for Bill Pay services
Why: Utility companies levy late payment fee on delayed bill payments. Bill pay services or standing instructions to your bank ensure your bills are cleared on time.
You save: Penalties ranging between from Rs 40 and Rs 100, depending on the utility company.

Opt for duplicate statements on email
Why: Banks charge a fee for issuing duplicate physical statements or passbooks.
You save: Rs 100

Avoid cash transactions at branches
Why: Banks allow 3-4 free cash transactions at branches in a month.
You save: Rs 50-150 per transction.

Maintain minimum balance at all times
Why: Not maintaining the required balance attracts non-maintenance charges.
You save: Rs 10-600 per month.

Do not issue cheques when the balance is inadequate
Why: Not only can dishonouring cheques attract charges, it is also a criminal offence under the Negotiable Instruments Act.
You save: Rs 500-750 per cheque.

Issue stop payment instructions online
Why: Some banks charge a fee for countermanding cheques through the physical route.
You save: Rs 100-200.

Never withdraw money with your credit card
Why: Issuers levy a transaction fee, in addition to interest payable.
You save: 2.5% of the amount withdrawn or a minimum of Rs 300-500.

Don’t exceed your credit limit
Why: If your card usage exceeds the credit card limit granted to you, your card issuer will levy a fee for extending this facility.
You save: 2.5% of the over limit amount or Rs 500.

Tax rules you should know to plan your savings for F.Y.- 2018-19

With the starting month of the F.Y.-2018-19 , it is a good time to start reviewing your tax-saving plans. And to do so, you must know the new tax rules that are effective from financial year 2018-2019.

Standard Deduction

In Budget this year, the government introduced, rather reintroduced, standard deduction of Rs 40,000 on taxable income. This standard deduction is in lieu of the annual transport allowance of Rs 19,200 (Rs 1,600 per month) and the annual medical reimbursement of Rs 15,000. The effective additional exemption stands at Rs 5,800 annually.

The deduction will be made directly from the salary, thereby, doing away with the cumbersome process of submitting bills. A tax-paying pensioner is also entitled to claim a standard deduction of Rs 40,000.

All about taxes and investments of an individual

Education Cess

The Budget raised the education cess on income tax from 3 per cent to 4 per cent. Earlier, the cess included 2 per cent education cess and 1 per cent secondary and higher education cess. The hike in education cess means one has to pay more tax.

Non-Salaried Get NPS Exemption

In good news for non-salaried individuals, contribution up to 20 per cent of the gross income to the pension account is eligible for deduction under Section 80 CCD (1) of the Income Tax Act, 1961. Earlier, the maximum deduction allowed to non-salaried individuals was capped at 10 per cent of the gross income.

Exemptions for Senior Citizens

According to Budget 2018, the tax exemption on income from interest from bank deposits and post offices has been increased from Rs 10,000 to Rs 50,000. The deduction limit for health insurance premium or medical expenditure has been raised from Rs 30,000 to Rs 50,000 under Section 80D.

Further, deduction limit for medical expenditure on critical illness is now Rs 1 lakh for all senior citizens under Section 80DDB. Earlier, the limit was Rs 60,000 for senior citizens and Rs 80,000 for very senior citizens.

Long-term Capital Gains Tax on Stocks

This year’s Budget saw re-introduction of the long-term capital gains (LTCG) tax on stocks. Investors will have to pay 10 per cent on profit exceeding Rs 1 lakh from sale of shares or equity-oriented mutual funds held for more than a year. All gains up to January 31, 2018 have been exempted.

ITD Warns Salaried Class Against Filing Wrong Returns

Income Tax Department Warns Salaried Class Against Filing Wrong Returns

The Income Tax Department on Wednesday cautioned salaried class taxpayers against using illegal means like under-reporting of income or “inflating” deductions while filing their returns, stating violators will be prosecuted and their employers will be intimated to take action against them.

The Central Processing Centre (CPC) of the Department in Bengaluru, that receives and processes the Income Tax Returns (ITRs), has issued an advisory specifying such taxpayers should not “fall prey” to unscrupulous tax advisors or planners who help them in preparing wrong claims to get tax benefits.

Calling it a “cautionary advisory” on reports of Tax evasion by under-reporting of income or inflating deductions or exemptions by salaried taxpayers, the department said such attempts “aided and abetted by unscrupulous intermediaries have been noted with concern”.

“Such offences are punishable under various penal and prosecution provisions of the Income Tax Act,” it said.

The advisory comes in the backdrop of the investigation wing of the department, in January, unearthing a racket of extracting fraudulent tax refunds by employees of bellwether information technology companies based in Bengaluru, in alleged connivance with a tax advisor.

The CBI recently registered a criminal case to probe this nexus.

The tax filing season for salaried class taxpayers has just begun with the Central Board of Direct Taxes (CBDT), that frames policy for the department, recently notifying the new ITRs.

The one-page advisory added that if the department notices any fraudulent claims in their ITRs, such claims “may be punishable under provisions of the IT Act and this may also delay issuance of their refunds.”

“Taxpayers, are, therefore strictly advised not to fall prey to false promises or mis-advice by unscrupulous intermediaries and submit wrong claims in their ITRs, which would be treated as cases of tax evasion. In the cases of such wrong claims by the government/PSU employees, reference would be made to the concerned vigilance division for action under conduct rules,” it added.

The advisory added that the department possesses an “extensive risk analysis system” that is aimed at identifying persons who are non-compliant and aim to subvert the trust based-system “envisioned” while processing of ITRs at the CPC, which it said is automated and devoid of any human interface.

“In all such cases of high risk , the department may examine and verify the details submitted by taxpayers in their ITR subsequent to the processing of returns,” it said.

It also asked tax planners and advisors to “confine their advice to taxpayers within the four corners of the IT Act” and warned that the violators will be prosecuted and such instances will also be referred to enforcement agencies like the CBI and the Enforcement Directorate (ED) for criminal prosecution.

S.Vaidyanath Aiyar Memorial Lecture organized by CIRC hosted by Jaipur Branch on 19th May 2018 at Jaipur ICAI Bhawan.

S.Vaidyanath Aiyar Memorial Lecture organized by CIRC hosted by Jaipur Branch on 19th May 2018 at Jaipur ICAI Bhawan.
Contact for Registration:
CA Komal Agrawal-9829524263
CA Sumit Goyal-8764058007
CA Sumit Vijayvargia-9928212499
CA Saurabh Baheti-9784668867
CA Abhishek Sharma-9680633375
CA Sumant Bhala-9829747888
CA Vikas Modi-7597913353
CA Gaurav Garg-9001000659
CA Nitin Jalan-9950306767
CA Nitin Baradia-8290877776
CA Rohit Sharma-8619597664
CA Akash Jain-9460671198
CA Durgesh Vijayvargia-9829615972
CA Kamal Jain-9782555151
CA Ravi Mamodiya-9828091785
CA Nikhiesh Kataria-9828037060
CA Shishir Agarwal-9887539278
CA Vijay Kumar Agarwal-9828149043
CA Akash Bargoti-9983332663
CA Raghav Dangayach -8290800171
CA Manoj Goyal-9529992640
CA Deepak Nandwana-9887805220
CA Pulkit Khandelwal -9783592230

Know about LLP- Limited Liability Partnership

1. Annual Return – FORM 11 – 60 days – 30th May, 2018
2. Statement of Accounts – FORM 8 – 30TH OCTOBER, 2018
3. INCOME TAX RETURN:
IF NO AUDIT- 31ST JULY
IF AUDIT – 30TH SEPTEMBER
STATUTORY AUDIT : Capital Contribution – 25 lakh or Annual Turnover – 40 Lakh
Mandatory Certificate from PCS – Annual Turnover – 5 crore or Contribution – 50 Lakh
Penalty – 100 Rs per day.
LLP can’t be close without making compliance good.

Economic Offenders Bill.

It’s never too late for doing something good, and finally after the PNB scam and the series of the scam are coming out in the open air the Govt. has finally introduced THE FUGITIVE ECONOMIC OFFENDERS BILL, 2018.

1. This bill was first introduced in 2017.

2. This bill has 25 Sections, three chapters, and one schedule.

3. This Bill extends to the whole of India.

4. Fugitive economic offender means any individual against whom a warrant for arrest in relation to a Scheduled Offence has been issued by any Court in India, who:

  • Has left India so as to avoid criminal prosecution; or
  • Being abroad, refuses to return to India to face criminal prosecution

5. This Bill Override all the law’s in India.6. Offence over and above one hundred crore rupees or more shall be dealt under this bill.

7. Special courts designated under Prevention of Money-laundering Act, 2002 shall have jurisdiction to deal with the offences under the bill.

8. The burden of proof that an individual is a fugitive economic offender shall be on the designated person (i.e. director) or the person authorized by the Director.

9. This Bill covers the specified offences under:

  • Indian Penal Code, 1860
  • Negotiable Instruments Act, 1881
  • Reserve Bank of India Act, 1934
  • Central Excise Act, 1944
  • Customs Act, 1962
  • Prohibition of Benami Property Transactions Act, 1988
  • Prevention of Corruption Act, 1988
  • Securities and Exchange Board of India Act, 1992
  • Prevention of Money Laundering Act, 2002
  • Limited Liability Partnership Act, 2008
  • Foreign Contribution (Regulation) Act, 2010
  • Companies Act, 2013
  • Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
  • Insolvency and Bankruptcy Code, 2016
  • Central Goods and Services Tax Act, 2017

10. The Bill does not involve any expenditure of recurring or non-recurring nature from the Consolidated Fund of India.

Financial Assistance for CA students by ICAI

The Board of Trustees has decided to provide financial assistance of Rs. 1,500/- p.m, for articled assistants who are registered for Intermediate (IPC)/IPCC course and Rs. 2,000/- p.m. for those students registered for final course and are currently undergoing articled/industrial training in accordance with The Chartered Accountants Regulations, 1988 and are poor, needy but meritorious to pursue the Chartered Accountancy course for one year with effect from 1st April, 2017 to 31st March, 2018 to be paid in lump sum, subject to filing of required application.

The eligibility criteria for obtaining financial assistance from CASBF are as under:

  • Annual income of parents from all sources must be less than Rs. 1.80 Lakh
  • Currently undergoing articled/industrial training as per C.A. Regulation, 1988

Students who are fulfilling the above criteria may apply for financial assistance from Chartered Accountants Students Benevolent Fund. Students may send their request in the prescribed Application form, duly filled in to the Member Secretary, Chartered Accountants Students Benevolent Fund at the following address so as to reach on or before 31st March 2018. The form can be downloaded from website of the Institute i.e. www.icai.org.

The Board of Trustees will consider each of such cases on merit basis and decide at their discretion on the amount to be granted from Chartered Accountants Students Benevolent Fund.

Member Secretary
Chartered Accountants’ Students Benevolent Fund
C/o The Institute of Chartered Accountants of India,
“ICAI Bhawan”,
A-29, Sector-62, Noida-201309,
Dist. Gautam Budh Nagar (U.P.)
Website: www.icai.org; email: cabf@icai.in

Form: CA Students Financial Assistance